Not surprisingly, news came earlier this week that Chip and Joanna Gaines – the design power couple behind the Fixer Upper series and the Magnolia brand – are coming back to television. This time, not solely as series stars but curators of their own network.

Discovery, which absorbed Scripps Networks and their HGTV, Food, Cooking, DIY, and other channels, is behind the offer to the Gaines.

I’ll make the assumption that their new network will replace one of Discovery’s lesser channels. (I’m looking at you, American Heroes and Destination America.) As noted in my new book, “The Genius Box,” large network groups took the same strategy as CPG companies in supermarkets. They filled program guide “shelves” with little-wanted brand variations, just to prevent the competition taking that space. But this resulted in many weak networks that offer little differentiation and lots of repurposed programming.

In this respect, the move to offer the Gaines the chance to rebrand and reprogram one of these networks makes sense. It can’t help but to be an improvement on what’s already on one of these lower-tier networks. And the cross-media potential of the Magnolia brand must be very enticing.

Drawbacks?

The drawback? Tying a network to a single personality has never had a good track record. Even the Queen of Media, Oprah, has been unable to make Discovery’s own OWN much more than a niche success. Nor was she able to break Oxygen before that. The problem is that even the best-loved personalities have a certain shelf life. Cable networks almost inevitably stray from their original targeted concepts to chase larger, broader audiences. And there is also the consideration that a “Magnolia” channel will cannibalize the audience of Discovery’s existing set of ex-Scripps lifestyle channels.

It sounds like any “Magnolia” network launch or rebrand is still well in the future. Regardless of potential negatives, such a move will certainly meet one rule of the Peak TV era: a brand strong enough to support its own OTT app.

David Tice is the principal of TiceVision LLC, a media research consultancy.
Read his new book, “The Genius Box” – details here
Get notifications of new posts – sign up at right or at bottom of this page.

As noted in one of my previous posts, at least some pay TV companies are finally pushing forward to eliminate set-top boxes (STBs) in favor of apps loaded to smart TVs. In that post, I alluded to the question of forgone revenue. A recent article in the L.A. Times put an estimate to that question.

The author of the article did some digging into costs and revenues. By his estimates, STBs cost between $150 and $250 as delivered to pay TV providers. But by average revenue from leases of those boxes, pay TV companies receive around $230 a year. This means it only takes about one year for companies to recover their expense for the box. Every month’s revenue after that is pure profit.

In terms of gross revenue, the author estimated Comcast’s Xfinity brings in $2.6 billion a year from STBs; and Charter brings in $1.4 billion. So while a billion may not buy what it used to, it’s still a large number to cut out of pay TV revenues. This is especially true with cord-cutters and skinny bundles also making a slow but sure impact.

Filling the Gap

There is surely money that can be saved from the overhead required to maintain a large stock of STBs – both administrative and in-field – but that is unlikely to fill the revenue gap. As I note in my previous post, to what new and inventive charges will subscribers be subjected in order to maintain overall revenues? And will that drive away even more consumers fed up with bring nickled-and-dimed to death by the legacy pay TV providers?

David Tice is the principal of TiceVision LLC, a media research consultancy.
Read his new book, “The Genius Box” – details here
Get notifications of new posts – sign up at right or at bottom of this page.